Liontown Resources announced it had refused a non-binding proposal offer from Albemarle to purchase all outstanding shares in the company for roughly A$5.2Bn (US$3.4Bn)

On 27^th March, Albemarle announced it had approached Liontown Resources (Liontown) with a non-binding proposal to acquire all outstanding shares in the company for A$2.50 per share, a 63% premium to the closing share price on March 27^th.  The offer valued Liontown Resources, which is developing the Kathleen Valley and Buldania lithium projects in Western Australia, at A$5.2Bn (US$3.2Bn). Albemarle has already accrued a 2.2% shareholding in Liontown via its subsidiary RT Lithium in market purchases. The proposal was quickly refused by Liontown, which stated it undervalued the company and its West Australian assets. Liontown has built significant interest in its development from multiple parties, signing off-take agreements with Ford Motors, Tesla and LG Energy Solutions in 2022 for spodumene mineral concentrates.

With several large lithium operations benefiting from record lithium compound prices in 2021 and 2022, an increase in M&A activity when prices began to slide was near inevitable. The Albemarle proposal to Liontown is likely only the start of approaches by major lithium producers to secure lithium projects for development in the rapidly growing industry. Chinese-based companies have started early, with several acquisitions of operations in Zimbabwe, Argentina and Mexico already being secured in 2022. 

It is unclear if Albemarle will revise their proposal at this stage, though the ball does appear to be in Liontown’s court. There are several giant resource and chemical enterprises looking to build their resource base over the coming years, which could see bidding wars similar to Tianqi Lithium and Rockwood’s (now Albemarle’s) purchase of the Greenbushes mine back in 2012. There are also only a limited number of advanced lithium projects located in jurisdictions with free-trade agreements in place with the USA, a critical factor for manufacturers wanting to benefit from tax breaks laid out in the US Inflation Reduction Act.